Farm groups testify at EPA hearing regarding renewable fuel standards |

Farm groups testify at EPA hearing regarding renewable fuel standards

The Hagstrom Report
Donnell Rehagen, CEO of the National Biodiesel Board
The Hagstrom Report |

Representatives of a wide range of biofuels and farm groups told the Environmental Protection Agency staff at a public hearing they appreciate the agency’s decision to maintain ethanol volumetric requirements, but believe the decision to lower volumes for advanced biofuels was a mistake.

The National Biodiesel Board said in a news release several witnesses will advocate for higher volumes of advanced biofuels and biomass-based diesel, believing the agency “must be more aggressive in meeting Congress’s goals to prioritize and move this country toward advanced biofuels.”

The EPA proposal would maintain the minimum required biomass-based diesel volumes at 2.1 billion gallons for 2019, NBB said. The EPA also proposed setting the 2018 RFS for advanced biofuels based on a minimum applicable volume of 4.24 billion gallons, a decrease from 4.28 billion gallons for 2017.

A final rule is anticipated this fall.

“The current numbers shortchange the progress we have made,” said Donnell Rehagen, chief executive officer at the National Biodiesel Board.

“They are a step back for the RFS, job creation, small businesses and rural economies. Let me assure you — these steps backwards are not about paper but people.”

American Soybean Association Vice President John Heisdorffer, an Iowa farmer, called on the EPA to increase the volumes for biomass-based diesel to at least 2.75 billion gallons for 2019 and to increase total advanced biofuels volumes to 5.25 billion gallons in 2018.

“The biodiesel industry has provided these benefits without any significant disruption or adverse impacts to consumers,” Heisdorffer testified. “Our industry has always advocated for RFS volumes that are modest and achievable and we have met or exceeded the targets each and every year that the program has been in place.”

Livestock interests have often said the RFS leads to higher feed costs, but Heisdorffer, who also runs a hog operation in his hometown of Keota, said the biodiesel industry presents an added benefit for the livestock industry.

“The market outlet that biodiesel provides for soybean oil also benefits livestock production by improving the margins for soybean processing and lowering the cost of soy meal used for livestock feed,” he stated. “A 2015 analysis … showed that biodiesel resulted in lower feed costs for U.S. livestock producers that ranged from $21 to $42 per ton, totaling $5.9 to $11.8 billion in total value.”

Chris Bliley, vice president of regulatory affairs for Growth Energy, said, “We very much appreciate EPA fulfilling the president’s commitment to ethanol and to the RFS in this proposal by committing to 15 billion gallons of conventional biofuels.”

Growth Energy represents 87 producers, 83 companies involved in the supply chain or associated with the production of ethanol.

“As an industry, we’ve clearly demonstrated an ability to meet that commitment,” Bliley said, “and with higher ethanol blends such as E15 available now at more than 900 locations in 30 states, we’ve pierced through any notion of a ‘blendwall.’

“However, we are concerned about the agency’s backpedaling on advanced biofuels and cellulosic biofuel in particular — with this proposal calling for less than was finalized in 2017,” Bliley said. “As with any new production process, it requires certainty, investment and a path toward growth. By significantly reducing the cellulosic volumes for 2018, the agency is sending the wrong signal regarding further advancement toward meaningful cellulosic production.”

Renewable Fuels Association President and CEO Bob Dinneen thanked the EPA for proposing to maintain the 15 billion gallon requirement for conventional renewable fuels in its 2018 RFS rule, but urged the agency to increase its proposed cellulosic ethanol requirement to reflect growing bolt-on technologies at existing ethanol plants.

Dinneen noted EPA’s recently released 2018 RFS proposal calls on refiners to blend 15 billion gallons of conventional renewable fuels like corn ethanol in 2018, adhering to the statutory requirement and unchanged from the final 2017 renewable volume obligation (RVO) rule.

“We believe EPA is well-justified in that decision, given the overwhelming evidence that more than sufficient (conventional ethanol renewable identification numbers) will be available for compliance this year and next,” Dinneen testified.

However, EPA proposed to lower the cellulosic ethanol requirement to 238 million gallons in its 2018 rule, he said.

“We understand the agency’s dilemma in establishing an appropriate RVO for cellulosic ethanol, but we truly believe the agency has erred on the side of pessimism with regard to the potential for significant growth in cellulosic ethanol commercialization,” Dinneen told EPA.

Dinneen also suggested EPA continue to allow imported biofuels to help comply with the RFS. “The RFS is not the platform to address trade concerns,” he testified.

Keith Alverson, a South Dakota farmer and member of the board of the National Corn Growers Association, also praised EPA’s proposed volume for conventional renewable fuels, but expressed concern about the lower cellulosic biofuel volume.

“Corn farmers recognize the strong link between first- and second-generation biofuels and the role corn fills in producing the next generation of homegrown fuel that increases our energy security and lowers costs for consumers,” Alverson said. “We ask the EPA to maintain the proposed conventional fuel requirement in the final rule … (but) set higher final volumes for cellulosic, advanced and total biofuels in order to draw the continued investment and innovation needed to maintain the expansion of cellulosic and advanced fuel production.

“As EPA noted in the proposed rule, many ethanol producers are investing in new technologies to produce cellulosic ethanol at existing facilities. NCGA urges EPA to work with producers to fully quantify this production and consider all 2017 cellulosic data,” Alverson testified.

The governors of Iowa and Nebraska also testified.

“It’s so important for Iowa farmers and producers, and it’s a welcome change from the past few years,” said Iowa Republican Gov. Kim Reynolds. “While I am thankful that the corn ethanol level was set at the statutorily required 15 billion gallons, I urge the EPA to raise the advanced biofuel, biodiesel and cellulosic volumes. The RFS is a bold policy, and Iowans and the industry as a whole have always risen to the challenge.”

Nebraska Republican Gov. Pete Ricketts said, “The importance of creating certainty and the stability that comes with it cannot be overstated. Releasing these volume proposals in a timely manner allows for planning and stability in the market.

“We are heartened to see the rule proposed by EPA allows for continued use of 15 billion gallons of conventional biofuels to meet RFS requirements. The proposal is consistent with the president’s statements of support for the corn ethanol industry and EPA Administrator Scott Pruitt’s commitment to implement the program in a way that honors Congressional intent.”